In Financing, what is a Good Delivery?

With financial transactions, a good delivery is a term used to describe a transaction in which all necessary procedures have been followed, and the transaction is considered proper and seamless. The term is also used to describe an investment trade in which all the criteria required for the orderly transfer of ownership of the asset has been met. In both these scenarios, when all details related to the transaction are in order, and the transaction is settled in full, it is said to be a good delivery.

The importance of a good delivery cannot be underestimated. Attaining this status means that the transaction is conducted in accordance with all terms and conditions that the buyer and the seller agreed upon at the time the business deal was commenced. For investments, this means that the purchase of stocks was initiated in a manner required by the exchange where those shares are traded, and the settlement date that was agreed upon by both parties is met. In order for a transaction to be considered a good delivery, the settlement price must also meet the criteria that governs the transaction, and comply with the terms that both parties agreed to when the deal was first struck.

A good delivery also requires that the transaction comply with all governmental regulations that are relevant to the sale or purchase. In the event that some sort of irregularity is discovered at any point during the transaction, it must be addressed and resolved before the transaction can be completed. To this end, buyers and sellers often make sure that any laws that govern trades are observed to the letter, allowing them to avoid any delays as a result of the failure to observe proper procedures and protocols.

When shares of stock are not traded in a manner that results in a good delivery, those shares are sometimes referred to as dirty stock. There are several situations that could lead to this designation, including some sort of issue with the stock certificate itself, or an irregularity in the establishment of the settlement date. Only after the issues that prevent the delivery from being good are corrected can the transaction be settled and thought of as being good. In order to avoid this type of situation, many investors will only execute transactions through a reputable brokerage, making it possible to avoid entering into deals that are of a questionable nature, or encountering delays that could cost the buyer some of the anticipated return on the investment.